Understanding Employment Practices Liability Insurance: How Wage and Hour Coverage Can Safeguard Your Business

Employment Practices Liability Insurance

No matter the product produced or the service provided, most business owners share the same greatest asset and largest investment—their employees. Attracting and retaining human capital is the desired result of considerable time and money spent on hiring, training, operating payroll, and providing benefits. In addition to the many unforeseeable factors that can effect a business’ financial statements, Human Resource professionals know they can avoid negative impact to the bottom line by assuring compliance with the many federal regulations and labor laws that surround employment practices. One of these laws is the Fair Labor Standards Act (FLSA) which governs how employees must be compensated. With the national conversation continuing to focus on issues such as minimum wage, overtime, and gender wage inequality, this is an area that will continue to cause friction between employers and their workforce. Likewise, you can guarantee that this will also remain an area where time and money must be allocated to ensure proper compliance when these laws are changed.

  • If labor laws are complicated and expected to change, how can savvy business owners protect themselves?

Having a properly structured Employment Practices Liability (EPLI) Policy in place helps assure that negative financial impact to the company is avoided or minimized when an employee alleges that a payroll error or oversight has occurred. Within an EPLI policy is a coverage extension commonly referred to as Wage and Hour Coverage. This is a provision, typically sublimited anywhere from $100,000 to $250,000, that provides defense cost reimbursement for alleged violations of the Fair Labor Standards Act or inaccurate compensation. Depending on the industry and demographics of the workforce, claims can be anything from a class action suit to a high-ranking executive’s contract dispute. If a company is dealing with an issue that may escalate into a claim, it’s important that the broker is notified so this coverage can be utilized. Once notified, the broker alerts the carrier, who then appoints experienced labor law attorneys to quickly respond.

  • How do I know if my policy includes Wage and Hour coverage?

One of my goals as a broker is to demystify the world of insurance for my clients. An area that is most commonly underserved by the insurance industry is the domain of Executive and Employment Practices Liability (EPLI). It’s important for business owners and executives to know how these policies work and the many advantages they provide that may not be readily apparent. While an EPLI policy is hardly a “beach read,” it’s my job to familiarize you with what it contains. With a thorough understanding of your policy, you can leverage its provisions to offset the cost of litigation if that undesirable outcome should arise. Although not every EPLI policy automatically includes Wage and Hour Coverage, we pride ourselves on structuring policies to offer all the pertinent options. It’s always our end goal to keep our clients from sustaining an employment-related blow to their financial statements.


For more information about your existing EPLI policy or your need to put one in place, please contact:


Dario Nalli

Dario J. Nalli works in the area of Business Development and Client Management as part of Michigan’s Executive Risk Team. At Oswald, his strategic focus lies in identifying, measuring, and managing professional and executive risks that face private and public companies in today’s highly litigious and connected global market. His goal is providing integrated solutions to aid clients in gaining real control of the management and professional exposures that organizations face during the conduct of everyday business.

Connect with Dario on LinkedIn.


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